PDF (PDF 112 KB) - Cornerstone OnDemand, Inc.

NEWS RELEASE
Cornerstone OnDemand Announces First Quarter 2015 Financial Results
5/6/2015
Record first quarter revenue of $74.0 million, up 29% year-over-year
Record first quarter bookings of $63.5 million, up 28% year-over-year1
Ended the quarter with over 2,200 clients and over 19.1 million users2
SANTA MONICA, Calif.--(BUSINESS WIRE)-- Talent management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today
announced results for its quarter ended March 31, 2015.
Revenue for the first quarter of 2015 was $74.0 million, representing a 29% increase compared to the same period in 2014. Non-GAAP
revenue for the first quarter of 2015 was $74.4 million, representing a 30% increase compared to the same period in 2014.1
Bookings, which the Company defines as revenue plus the change in deferred revenue for the period, were $63.5 million for the first quarter
of 2015, representing a 28% increase compared to the same period in 2014.1 Deferred revenue at March 31, 2015 was $180.9 million,
representing a 38% increase compared to the balance at March 31, 2014.
“We had a solid first quarter, including strong results from Asia Pacific,” said Adam Miller , the Company’s President and CEO. “With the stateof-the-art analytics capabilities and platform-as-a-service offering that will be unveiled at our annual client conference next week, we believe
we are poised to begin our Second Act in transforming the way organizations empower people to realize their potential.”
The Company’s operating loss for the first quarter of 2015 was $(17.7) million, yielding an operating loss margin of (24)%, compared to an
operating loss of $(12.7) million, yielding an operating loss margin of (22)%, for the first quarter of 2014.
Non-GAAP operating loss for the first quarter of 2015 was $(5.8) million, yielding a non-GAAP operating loss margin of (8)%, compared to a
non-GAAP operating loss of $(4.0) million, yielding a non-GAAP operating loss margin of (7)%, for the first quarter of 2014.1
The Company’s net loss for the first quarter of 2015 was $(23.3) million, yielding a net loss margin of (31)%, or a $(0.43) net loss per share,
compared to a net loss of $(15.8) million, yielding a net loss margin of (28)%, or a $(0.30) net loss per share, for the first quarter of 2014.
Non-GAAP net loss for the first quarter of 2015 was $(9.3) million, yielding a non-GAAP net loss margin of (12)%, or a $(0.17) non-GAAP net
loss per share, compared to a non-GAAP net loss of $(5.1) million, yielding a non-GAAP net loss margin of (9)%, or a $(0.10) non-GAAP net
loss per share, for the first quarter of 2014.1
1
The Company ended the quarter with over 2,200 clients and over 19.1 million users.2
1 Bookings, non-GAAP revenue, non-GAAP operating loss, non-GAAP operating loss margin, non-GAAP net loss, non-GAAP net loss margin, and non-GAAP net loss per share are nonGAAP financial measures. Please see the discussion in the section “Non-GAAP Financial Measures” and the reconciliations at the end of this release.
2 Includes contracted clients and active users of our Enterprise and Mid-Market solution, excluding Cornerstone for Salesforce and Cornerstone Growth Edition.
Quarterly Conference Call
Cornerstone OnDemand, Inc. will host a conference call to discuss its first quarter 2015 results at 2:00 p.m. PT (5:00 p.m. ET) today. A live
audio webcast of the conference call, together with detailed financial information, can be accessed through the Company’s Investor
Relations Web site at http://investors.cornerstoneondemand.com/events.cfm. The live call can be accessed by dialing (877) 445-4619 (U.S.)
or (484) 653-6763 (outside the U.S.) and referencing passcode: 23631708. A replay of the call will also be available at
http://investors.cornerstoneondemand.com/events.cfm or via telephone until 11:59 p.m. PT on May 9, 2015 by dialing (855) 859-2056
(U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 23631708.
About Cornerstone OnDemand
Cornerstone OnDemand, Inc. is a leader in cloud-based applications for talent management. Our solutions help organizations recruit, train,
manage and engage their employees, empowering their people and increasing workforce productivity. Based in Santa Monica, California,
our solutions are used by over 2,200 clients worldwide, spanning more than 19.1 million users across 191 countries and in 42 languages. For
more information about Cornerstone OnDemand, Inc., visit www.csod.com.
Note: Cornerstone® and Cornerstone OnDemand® are registered trademarks of Cornerstone OnDemand, Inc.
Forward-looking Statements
This release and the quarterly conference call referenced above contain forward-looking statements, including statements regarding
Cornerstone OnDemand’s future financial performance, including the performance of our core business and emerging businesses, market
growth, the demand for and benefits from the use of Cornerstone OnDemand’s current and future solutions, and general business
conditions, as well as Cornerstone OnDemand’s expectations regarding annual dollar retention rate, gross margins, operating expenses,
revenue, non-GAAP net income or loss, non-GAAP loss per share, net loss margin and non-GAAP cash flows provided by operating activities
for the second quarter and full year of 2015. Any forward-looking statements contained in this press release or the quarterly conference call
are based upon Cornerstone OnDemand’s historical performance and its current plans, estimates and expectations and are not a
representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Cornerstone
OnDemand’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Cornerstone
OnDemand disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject
to known and unknown risks and uncertainties that may cause actual results to differ materially from Cornerstone OnDemand’s current
expectations. Important factors that could cause actual results to differ materially from those anticipated in our forward-looking statements
include, but are not limited to, our ability to attract new clients; the extent to which clients renew their subscriptions for our solution; the
timing of when consulting services are delivered to our new and existing clients by our services organization and implementation
subcontractors; the complexity of deployments and product implementations, which can impact the timing of when revenue is recognized
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from new and existing clients; our ability to compete as the talent management provider for organizations of all sizes; changes in the
proportion of our client base that is comprised of enterprise or mid-sized organizations; our ability to manage our growth, including
additional headcount and entry into new geographies; our ability to expand our enterprise and mid-market sales teams; our ability to
maintain stable and consistent quota attainment rates; our ability to exploit Big Data to drive increased demand for our products; continued
strong demand for talent management in the U.S., Europe, Asia Pacific and Latin America; the timing and success of solutions offered by our
competitors; unpredictable macro-economic conditions; reductions in information technology spending; the success of our new product and
service introductions; a disruption in our hosting network infrastructure; costs and reputational harm that could result from defects in our
solution; the success of our strategic relationships with third parties; the loss of any of our key employees; failure to protect our intellectual
property; acts of terrorism or other vandalism, war or natural disasters; changes in current tax or accounting rules; unanticipated costs or
liabilities related to businesses that we acquire; our ability to successfully integrate our operations with those of recently acquired Evolv Inc.;
and other risks and uncertainties. Further information on factors that could cause actual results to differ materially from the results
anticipated by our forward-looking statements is included in Cornerstone OnDemand’s reports filed with the SEC, including its Annual
Report on Form 10-K filed with the SEC on February 27, 2015.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted
accounting principles, or GAAP, Cornerstone OnDemand has provided in this release and the quarterly conference call held on the date
hereof certain measures that have not been prepared in accordance with GAAP. These non-GAAP financial measures include (i) non-GAAP
revenue, which is defined as revenue plus revenue not recognized in the period due to the impact of purchase accounting rules on deferred
revenue acquired through acquisitions, (ii) non-GAAP cost of revenue, which is defined as cost of revenue less amortization of intangible
assets and stock-based compensation and employer-related taxes, (iii) bookings, which are defined as revenue plus the change in deferred
revenue for the period, (iv) non-GAAP net cash provided by operating activities, which excludes payment of acquisition related costs,
payment of premium on investments net of related amortization and employer-related taxes from stock-based compensation, (v) non-GAAP
net cash (used in) provided by operating activities margin, which is defined as non-GAAP net cash provided by operating activities divided by
non-GAAP revenue, (vi) non-GAAP net loss and non-GAAP net loss per share, which are based on non-GAAP revenue and exclude, for the
periods in which they are present, stock-based compensation and employer-related payroll taxes, amortization of intangible assets,
adjustments to taxes related to acquisition adjustments, acquisition related costs, accretion of debt discount and amortization of debt
issuance costs, and other amortization costs, (vii) non-GAAP net loss margin, which is defined as non-GAAP net loss divided by non-GAAP
revenue, (viii) non-GAAP gross profit and non-GAAP gross margin, which are calculated based on non-GAAP revenue and exclude stockbased compensation and employer-related taxes and amortization of certain intangible assets reflected in cost of revenue, (ix) non-GAAP
operating loss and non-GAAP operating loss margin, which are calculated based on operating loss and exclude adjustments to revenue,
stock-based compensation and employer-related taxes, amortization of intangible assets and acquisition costs, and (x) non-GAAP operating
expenses, which exclude stock-based compensation, employer-related taxes, and amortization of intangible assets, and (xi) non-GAAP sales
and marketing expense, non-GAAP research and development expense, and non-GAAP general and administrative expense, each of which
excludes stock-based compensation and employer-related taxes attributable to the corresponding GAAP financial measures.
Cornerstone OnDemand’s management uses these non-GAAP financial measures internally in analyzing its financial results and believes
they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating Cornerstone OnDemand’s ongoing
operational performance and trends and in comparing its financial measures with other companies in the same industry, many of which
present similar non-GAAP financial measures to help investors understand the operational performance of their businesses. However, it is
important to note that the particular items Cornerstone excludes from, or includes in, its non-GAAP financial measures may differ from the
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items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in
accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable
GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures has been provided in the tables
included as part of this press release.
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Deferred commissions
Prepaid expenses and other current assets
Total current assets
March 31, 2015
Assets
Capitalized software development costs, net
Property and equipment, net
Long-term investments
Intangible assets, net
Goodwill
Other assets, net
Total Assets
Liabilities
Cornerstone OnDemand, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
$
$
86,648
133,449
61,392
24,758
15,785 322,032
17,245
23,101
53,590
24,639
25,894
5,124 471,625 Liabilities and Stockholders' Equity
Accounts payable
Accrued expenses
Deferred revenue, current portion
Capital lease obligations, current portion
Debt, current portion
Other liabilities
Total current liabilities
Convertible notes, net
Other liabilities, non-current
Deferred revenue, net of current portion
Total liabilities
$
226,932
3,588
12,504 449,155
Stockholders' Equity
Common stock
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Total stockholders’ equity
Total Liabilities and Stockholders' Equity
12,660
22,156
168,352
141
228
2,594 206,131
$
5
346,553
(324,628)
540 22,470 471,625 December 31, 2014
$
166,557
116,106
84,499
26,236
13,007 406,405
15,719
21,424
3,938
27,282
25,894
4,993 505,655 $
$
16,737
29,476
180,598
236
351
3,052 230,450
225,094
3,871
10,738 470,153
5
336,692
(301,366)
171 35,502 505,655 $
4
Cornerstone OnDemand, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
2015
2014
Revenue
Cost of revenue 1, 2
Gross profit
Operating expenses:
Sales and marketing 1
Research and development 1
General and administrative 1
Amortization of certain acquired intangible assets
Total operating expenses
Loss from operations
Other income (expense):
Interest income
Interest expense
Other, net
Other income (expense), net
Loss before income tax provision
Income tax provision
Net loss
Net loss per share, basic and diluted
Weighted-average common shares outstanding, basic and diluted
$
$
$
73,955
$
24,662 49,293
57,409
17,404 40,005
45,958
9,767
11,091
150 66,966 (17,673)
35,139
6,883
10,454
251 52,727 (12,722)
170
(3,091)
(2,390) (5,311) (22,984)
(278) 223
(3,010)
(128)
(2,915)
(15,637)
(153)
(23,262) $
(0.43) $
53,876 Three Months Ended
March 31,
2015
2014
$
$
819
$
4,720
1,172
2,041 8,752 $
802
3,714
803
2,821 8,140 2 Cost of revenue includes amortization of intangible assets as follows:
Three Months Ended
March 31,
2015
2014
Cost of revenue
(15,790)
(0.30)
52,726 1 Includes stock-based compensation and employer-related taxes as follows:
Cost of revenue
Sales and marketing
Research and development
General and administrative
Total
$
2,492
$
312
5
Cornerstone OnDemand, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
March 31,
2015
2014
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization
Accretion of debt discount and amortization of debt issuance costs
Purchased investment premium, net of amortization
Unrealized foreign exchange loss (gain)
Stock-based compensation expense
Changes in operating assets and liabilities:
Accounts receivable
Deferred commissions
Prepaid expenses and other assets
Accounts payable
Accrued expenses
Deferred revenue
Other liabilities
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Purchases of investments
Maturities of investments
Purchases of property and equipment
Capitalized software costs
Net cash used in investing activities
Cash flows from financing activities:
Repayment of debt
Principal payments under capital lease obligations
Proceeds from employee stock plans
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
(23,262)
$
(15,790)
6,228
2,133
(65)
1,887
8,717
3,072
2,031
926
(129)
7,892
21,356
974
(3,515)
(2,362)
(6,954)
(7,104)
(683) (2,650) 14,897
741
2,504
1,088
(5,401)
(8,080)
(2,872)
879 (81,497)
14,497
(5,064)
(3,471) (75,535) (17,504)
16,012
(3,196)
(2,349)
(7,037)
(124)
(95)
1,383 1,164 (2,888)
(79,909)
166,557 86,648 (139)
(318)
5,609 5,152 108 (898)
109,583 108,685 $
$
6
Cornerstone OnDemand, Inc.
RECONCILIATIONS OF REVENUE TO NON-GAAP REVENUE, COST OF REVENUE TO NON-GAAP COST OF REVENUE, GROSS PROFIT AND GROSS
MARGIN TO NON-GAAP GROSS PROFIT AND NON-GAAP GROSS MARGIN, LOSS FROM OPERATIONS TO NON-GAAP OPERATING LOSS AND
OPERATING MARGIN TO NON-GAAP OPERATING MARGIN
(in thousands)
(unaudited)
Three Months Ended
March 31,
2015
2014
Revenue
Cost of revenue
Gross profit
Gross margin
Revenue
Adjustments to revenue 1
Non-GAAP revenue
Cost of revenue
Adjustments to costs of revenue
Amortization of intangible assets
Stock based compensation and employer-related taxes
Total adjustments to cost of revenue
Non-GAAP costs of revenue
Non-GAAP gross profit
Non-GAAP gross margin
$
Non-GAAP operating loss
Non-GAAP operating income loss
$
73,955
24,662 49,293 67%
$
73,955
480 74,435 $
24,662
$
Loss from operations
Operating margin
Adjustments to loss from operations
Adjustments to revenue 1
Stock-based compensation and employer-related taxes
Amortization of intangible assets
Total adjustments to loss from operations
$
$
$
(2,492)
(819)
(3,311)
21,351 53,084 71%
(17,673)
(24)%
480
8,752
2,642 11,874 (5,799)
(8)%
$
57,409
17,404 40,005 $
70%
$
$
57,409
- 57,409 $
17,404
(312)
(802)
(1,114)
16,290 41,119 $
$
72%
(12,722)
(22)%
8,140
563 8,703 $
(4,019)
(7)%
1 Due to purchase accounting rules, upon acquisition of Evolv Inc., Cornerstone recorded an adjustment of $1.9 million to reduce the balance of deferred revenue related to the
assumed client contracts acquired from Evolv Inc. As a result of this adjustment, $0.5 million of revenue was not recognized during the three months ended March 31, 2015.
Therefore, revenue is adjusted by an increase of $0.5 million to arrive at non-GAAP revenue for the three months ended March 31, 2015.
7
Cornerstone OnDemand, Inc.
RECONCILIATIONS OF NET LOSS TO NON-GAAP NET LOSS, NON-GAAP NET LOSS MARGIN AND NON-GAAP NET LOSS PER SHARE
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
2015
2014
Net loss
Net loss margin
$
Adjustments to net loss
Stock-based compensation and employer-related payroll taxes
Acquisition related:
Adjustments to revenue
Amortization of intangible assets
Accretion of debt discount and amortization of debt issuance costs 1
Other amortization costs
Total adjustments to net loss
Non-GAAP net loss
Non-GAAP net loss margin
Weighted-average common shares outstanding, basic and diluted
Non-GAAP net loss per share
$
$
(23,262)
(31)%
$
(15,790)
(28)%
8,752
8,140
480
2,571
2,133
71 14,007 492
2,031
71 10,734 (9,255)
(12)%
53,876 (0.17)
$
(5,056)
(9)%
52,726 (0.10)
$
1 Debt discount accretion and debt issuance cost amortization has been recorded in connection with our issuance of $253.0 million in convertible notes on June 17, 2013. These
expenses represent non-cash charges that have been recorded in accordance with the authoritative accounting literature for such transactions.
Cornerstone OnDemand, Inc.
CALCULATIONS OF BOOKINGS
(in thousands)
(unaudited)
Deferred Revenue Three Months Ended
Balance
March 31, 2015
Revenue
Deferred revenue at December 31, 2014
Deferred revenue at March 31, 2015
Change in deferred revenue
$
Bookings
191,336
180,856 (10,480) $
73,955
(10,480)
63,475 $
Deferred Revenue Three Months Ended
Balance
March 31, 2014
Revenue
Deferred revenue at December 31, 2013
Deferred revenue at March 31, 2014
Change in deferred revenue
Bookings
Percentage period-over-period increase in bookings for the three months ended March 31, 2015
$
138,822
131,072 (7,750) $
57,409
$
49,659 (7,750)
28%
8
Cornerstone OnDemand, Inc.
RECONCILIATION OF NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES TO NON-GAAP NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES AND NON-GAAP NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES MARGIN
(in thousands)
(unaudited)
Three Months Ended
March 31,
2015 2014
Net cash (used in) provided by operating activities
Net cash (used in) provided by operating activities margin
Payment of acquisition related costs 1
Payment of employer related taxes from stock-based compensation
Purchased investment premium, net of amortization
Non-GAAP net cash (used in) provided by operating activities
Non-GAAP net cash (used in) provided by operating activities margin
1 Costs paid during the three months ended March 31, 2015, related to acquisition of Evolv Inc.
$
$
(2,650)
(4)%
737
35
65 (1,813)
(2)%
$
$
Source: Cornerstone OnDemand
Cornerstone OnDemand, Inc.
Investor Relations Contact:
Alexandra Geller, 1 (310) 752-1870
[email protected]
or
Media Contact:
Sarah Platte, 1 (310) 752-1799
[email protected]
9
879
2%
248
(926)
201 -%